The Tribune Democrat, Johnstown, PA

Columns

January 12, 2013

JOHN FINNERTY | State House facing thorny pension issues

HARRISBURG — The state House convenes its first day in session in 2013 on Monday with a number of hot-button issues looming on the horizon. None may be hotter than the public pension funding crisis.

For those who have not been following this: The Corbett administration estimates that there is $41 billion gap between what the pension fund’s assets and its liabilities.

All prior discussions have been focused on changes to the rules for new employees.

Gov. Tom Corbett has hinted that the current state of the pension crisis suggests that current state employees may be asked to accept changes in the way their pensions are funded.

Off-limits, though, has been any discussion about making changes to those who already have retired.

There is context worth considering. Pennsylvania has a pension crisis largely due to the lack of foresight of lawmakers who granted themselves and state workers generous increases in pension benefits while declining to sufficiently contribute the state’s employer share. In 2001, the pension’s investment holdings were performing well, so rather than fund the pension at the level their own legislation had indicated was needed, lawmakers crafted new laws to diminish the amount the state needed to pay.

Then the stock market crashed.

The 386,000 current state workers, including public schoolteachers, have been making their employee contributions and are now warned that they may have to pay more or accept other changes in the way their pensions are structured.

Many of the lawmakers who steered this ship into the iceberg are retired and collecting generous pension packages they helped set up.

A voters advocacy organization, Rock the Capital, took a look at some of the pension payouts accepted by now-retired lawmakers who voted to boost their own pensions.

The organization found that Rep. Richard A. Geist, a Republican from Blair County, who sponsored the 2001 pension increase, left office at a time when his salary was $75,190. His annual pension payout will be $64,742.16.

Sen. Jeffrey Piccola, a Republican from Dauphin County, had a salary of $75,190 when he retired, but his annual pension payout is $83,845, Rock the Capital found. In addition, Piccola took a lump sum payout of $211,855.

Piccola is not the only retired lawmaker who is getting a pension payment that exceeds his last annual salary. Former

Rep. Merle Phillips, a Republican from Northumberland County was paid $89,300 in his last year in office.

His annual pension payment is $120,261. Shortly after Corbett raised the pension issue in November, Phillips told a reporter that it might make sense to raise the retirement age, but more drastic measures may not be needed if the stock market begins to perform better.

Any long-term solution to the issue of public sector employee benefits ought to confront the tension created by the fact that lawmakers have a direct personal stake in whatever decision they make.

There is something wrong with a system that allows lawmakers to create benefit packages for themselves and then retire while leaving their successors and taxpayers to deal with the aftermath. Term limits might help by limiting the potential for lawmakers to set themselves up for hefty pension payouts.

 Elsewhere:

On Tuesday, Attorney General Kathleen Kane takes the oath of office. Kane becomes the first Democrat Attorney General elected in Pennsylvania. Kane has pledged that her office will examine the role taken Corbett, then attorney general, during the months-long delay between when a grand jury heard testimony about allegations involving Jerry Sandusky and the time charges were filed.

Taking office on Monday will be new Auditor General Eugene Depasquale, who has pledged to use his position to serve as a watchdog over how state agencies regulate the vastly expanded gas drilling industry in Pennsylvania.

 

 John Finnerty covers Pennsylvania politics for CNHI News Service.

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